This month, Bank of America has announced that it is leaving its UK and Ireland credit card businesses.
This follows other moves to transform Bank of America’s credit card operations such as the sale of the UK arm of the business lending portfolio and its sale of the Spanish credit card business.
The Bank of America credit card business was huge in Europe, amounting to $19 billion in credit card loans in Europe alone.
However, after reporting record losses of $8.8 billion in the quarter ending June 2011, Bank of America has decided to sell elements of its portfolios outside the U.S.
But if you hold a Bank of America credit card in the UK or Ireland, what impact will this announcement have on you?
Your debt will be moved on to whoever purchases Bank of America’s credit card loans portfolio. In April 2011, Bank of America sold £200 million of small business card loans to Barclays.
Generally, whoever buys Bank of America’s credit card loans will honor any existing promotional rates you had with Bank of America. But be warned, if you miss a repayment your interest rate will automatically switch to the standard APR.
Similarly, if you spend on the card, that new debt will be subject to the standard APR also. You should receive a letter stating to whom your outstanding credit card debt has been moved to.
It should also let you know if your existing terms and conditions remain the same and whether any direct debit payments will be automatically transferred over. It may be time to investigate transferring your debt to a credit card with a promotional rate.
If you are worried about the extent of your outstanding credit card debt or are unable to secure any more lending due to your credit history bad credit credit cards may be an option for you.
Bad credit credit cards allow you to borrow while you work on improving your credit rating. These credit cards will not offer any special interest rate; in fact, they will probably be above the average APR on the market as you are viewed as high risk.
The way to operate these cards is to pay off your balance in full every month so you do not incur any interest charges. By operating the card perfectly for a period of time, maybe six to twelve months, you should be able to rebuild or improve your credit score.
This should give you access to more and better borrowing options in the future. It should also help you adopt a responsible lending approach, only borrowing what you need and making repayments in full.
The unstable economy has made lenders much more cautious about lending and credit is certainly not as easy to get as it was a few years ago. Seemingly stable institutions like Bank of America with a long and successful history have stumbled in the global recession.
Clawing back losses for banks means higher interest rates, more conservative lending and passing on your debt to other institutions.
It is prudent to keep an eye on the companies you are involved with and make sure there is not a better deal out there that will give you a better interest rate.
{ 0 comments }